Not the Garden State for Clinical Trials: NJ Takes on Device Manufacturer in Failure to Disclose Investigators’ Financial Stake in Company

The State of New Jersey announced this week that it had entered into a landmark agreement with Synthes, Inc. to settle allegations that Synthes failed to disclose financial conflicts of interest among doctors who conducted clinical testing on its products. Synthes is a manufacturer of instruments, implants, and biomaterials for the surgical fixation, correction, and regeneration of the skeleton and its soft tissues. Synthes was alleged to have provided stock to investigators in clinical trials of Synthes’ products. Under the agreement – an Assurance of Voluntary Compliance – Synthes is obligated to collect, maintain, and disclose to New Jersey accurate data relating to the financial interests of all clinical investigators involved in all ongoing and future clinical trials for the company’s medical devices. Synthes also paid New Jersey $236,000 to settle the allegations.

The agreement is the result an investigation launched by New Jersey in February 2008 into the financial conflicts of interest of the surgeons participating as clinical investigators in clinical trials for Synthes’ ProDisc Total Replacement System, ProDisk-L, and ProDisk-C. In a letter to FDA, New Jersey’s Attorney General, Anne Milgram, stated that “[t]he investigation revealed that a majority of the physicians who participated in these clinical trials had significant investments in the products – investments that would have been worthless had the product failed to obtain regulatory approval from the FDA.” Ms. Milgram also stated that “these interests should have been obvious from even a cursory review of [Synthes’] FDA submissions” but that “FDA did nothing to regulate these conflicts.” Although Ms. Milgram complained of the practice of compensating investigators with stock in the company whose products they are studying, it is unclear whether New Jersey would have had any claims if Synthes had properly disclosed the investigators’ financial interests to FDA, as they are required to do under 21 C.F.R. Part 54.

New Jersey’s Office of the Attorney General reported that the agreement is the first of its kind. Ms. Milgram recommended in a press release that the agreement serve as a template to end conflicts of interest from clinical trials in the device industry. Her letter to FDA also stated that that the terms of the agreement should become “best practices for the entire medical device industry.”

The settlement requires Synthes to select clinical investigators based solely on their qualifications, training, research, and/or expertise, and details how Synthes must investigate and document the financial interest information of any clinical investigator. Synthes must also develop a new Standard Operating Procedure for soliciting, collecting, and disclosing the financial information of clinical investigators, and Synthes’ payments to clinical investigators are limited to “fair market value compensation for services intended to fulfill a legitimate business need.” Terms throughout the agreement reinforce Synthes’ obligation to comply with FDA regulations.